As Bitcoin continues to gain a foothold within the international currencies and commodities markets, researchers worldwide are looking for other potential applications for the blockchain itself. Over the next few weeks I will be highlighting a number of these concepts not only to continue to share the ideas globally but to hopefully inspire further innovation. For this post, we will start with insurance, which just like the payments industry desperately needs innovation.
Recently The Y/Zen Group, a financial technologies based think tank, published a research paper “Chain of a Lifetime: How Blockchain Technology Might Transform Personal Insurance” (http://www.longfinance.net/images/Chain_Of_A_Lifetime_December2014.pdf). The insurance industry is currently pegged at near or around $1.1 Trillion and as of the end of 2012 the United States based insures held nearly $7.3 trillion in total assets. The Y/Zen Group identified a number of areas where the blockchain based technology could be applied to this industry both to instill innovation and cost savings. This report focused on conceptual applications and the implications to four major insurance areas, identity, space, time, and mutuality.
Y/Zen states, “Blockchain technology is said to have potential for financial services application, including insurance, through distributed applications hosted on decentralized platforms, such as: Bitcoin, the first blockchain protocol released in 2009; Ethereum, an open platform which could host distributed applications; or, BitNation, a more recent project which aims to provide financial services applications including insurance.” The blockchain’s ability to enable distributed applications continues to prove itself to be auspicious. This can easily allow for automated systems and products focused within the insurance space including but not limited to financial derivative contracts. Y/Zen strove even as far to include crop insurance systems that allow hedging against potential weather conditions while simultaneously tying smart contracts hosted on the blockchain with a trusted weather feed.
Furthermore the combination of blockchain protocol with distributed applications allow for assets and data relevant to insurance to be stored and managed on the chain itself. This can be applied to medial data including medical records as seen through Genecoin which is currently allowing individuals the ability to back up their own DNA directly on the blockchain. This can provide an easy and secure way to store and protect medical records in a single universally available system.
Lastly, the blockchain provides an incredibly unique method to manage insurance based risk. As we have already seen with multisignature bitcoin technologies, even within The Coin Tree’s own systems, users have the ability to secure their transactions and storage through multisignature verification. This protects not only bitcoins stored asset value, but also the potential stored information. This allows businesses and individuals the ability to outsource emerging risks to third party providers which will undoubtedly drive derivate based commerce.
When it comes to the blockchain it seems the options continue to be limitless, Marc Andreesen recently stated that, “The consequences of this breakthrough are hard to overstate.” I and all of us at The Coin Tree couldn’t agree more.
By: Andrew Durgee
CEO – The Coin Tree